The Federal Reserve System was inaugurated 100 years ago, and inflationary policies are exhibit one for its role as executor of junk economics science.
The Constitution charges the congress with assuring the reliability and stability of the currency.
The Wilson campaign to create the Federal Reserve, created in 1913, was to prevent bank failures and banking crises. Not real successful.
However the Federal Reserve has become the means by which ambitious politicians can steal the wealth of the citizens with inflationary policies for short term political gains. Keynes showed the way for even more irresponsible monetary policy, calling it “priming the pump.” The main victims of such misconduct are those who own non fungible tangible assets or are on fixed incomes and cannot ride up the inflationary elevator.
The result is that a dollar in 1913 is now worth 4 cents. By contrast a dollar in 1789 was worth $1.08 in 1913.
Milton Friedman showed in his Magnum Opus Monetary History of the United States that monetary supply cannot be neglected as a cause of deflation and inflation. Friedman showed that deflationary monetary policy in the 30s aggravated the depression, and he also argued effectively against the John Maynard Keynes’ theory of inflation as a way to improve employment and economic activity.
Here is an essay that briefly describes the problem of the Fed. Even science scholars should know about economics–good economists can explain economics without any formulae–like Ludwig von Mises did in his books. My kind of economist.
I found economics essential study and economics is “science” or at least an organized discipline and certainly subject to scientific or professional neglect, incompetence or fraud that produce “junk economics.”
Well hot damn, a physical chemist, or is it really chemical physics.
I was fascinated to know that physical chemists are into crystolography and magical ways to actually figure out the 3 dimensional configuration of molecules.
cool. Of course I was not smart enough to be such a person, but I am charming and found a job that involved convincing patients I knew what I was doin’.
John Dale Dunn MD JD Consultant Emergency Services/Peer Review Civilian Faculty, Emergency Medicine Residency Carl R. Darnall Army Med Center Fort Hood, Texas Medical Officer, Sheriff Bobby Grubbs Brown County, Texas 325 784 6697 (h) 642 5073 (c)
1. The Fed is still a secretive board. It is a corporation whose stockholders have never been publicly identified. It acts for their interests above the public’s interest. We should press the Fed to come clean with its ownership.
2. The Fed controls the entire monetary policy of the country, including the size of the money supply. If the Fed does not allow enough growth in the money supply, then growth in the total income (GDP) of the country will be retarded. The GDP can be made to go backwards, as the Fed did to us in 2006, causing the greatest recession since the Great Depression.
3. The threat of cutting the money supply growth (i.e. “taper”) must be fought. The taper will again result in lower GDP.
4. All efforts to audit the fed are good. So let’s get going.
My observations of other students while I was in graduate school convinced me that almost all psychology majors believed they were almost crazy and wanted to learn how to get sane. Similarly almost all economics majors believed they were poor and wanted to learn how to get rich.
(I studied chemical physics because I believed I was ignorant and wanted to learn how to get smarter.)
Paul Krugman still represents himself as an economist and doesn’t get laughed out of the NY Times. Enough said about this so-called profession.